The U.S. Commerce Department moved to add Huawei and 70 affiliates to its so-called "Entity List", effectively banning the Chinese telecoms giant from buying parts and components from U.S. companies without a government approval.

"The markets continue to be headline-driven," said Liu Jinshu, director of research, NRA Capital, referring to the U.S. business restrictions on Huawei, the world's second-largest smartphone maker.

The ban on Huawei "can be taken negatively with regards to how the Trump administration plans to ease tensions between the two largest economies in the world," said Fio Dejesus, equity research analyst, RCBC Securities.

Leading the losses, the Indonesian index dropped 1.4% to close at its weakest since Nov. 15, 2018, dragged lower by industrials and utilities.

Southeast Asia's largest economy kept its benchmark interest rate unchanged at 6%, as expected, following a central bank meeting on Thursday.

Last year between May and November, the Bank Indonesia raised the benchmark six times by 175 basis points to support the rupiah in the wake of U.S. rate hikes by the Federal Reserve.

Philippine stocks dropped 1.3% to mark their lowest since January 2, as the benchmark index was dented by energy and industrial stocks.

The Philippines, an ally of the United States, in February pushed ahead to launch a Huawei Technologies-backed 5G service in the country, while Washington said it would rethink cooperation with allies who use Huawei.